Macro Views：Export Volume Growth Remained High in July

Huatai Research 8 August 2024 | China (Malnland) EvaYISAC No. S057052010005AnalystSFC No. AMH263evayintso.com+(852) 3668 6000 Comment on China's trade datafor July2024 According to General Administration of Customs of China (GACC), for July 2024, China's yoy export growth in USDterms fell from 8.6% in June to 7%, faling below Bloomberg consensus estimate of 9.5%; yoy import growth in USD termswas. primarily due to the lack_of momentum in the_global manufacturing_cycle, especially s marginal slowdown in.US consumption.coupled_with_declining_price_indexes_ Despite_ this,_China's_export_volume_still showed_robust_growth_ The_sustained boom_inelectronics and the low base boosted China's imgort.growth, According to our export price model, for July: yoy growth in the exportprice index in USD terms read -9.7%, with yoy growth in export volume estimated at around 18.5%, representing continueddouble-digits rise; yoy growth in the import price index in USD terms read -2.6%, with yoy growth in import volume estimated ataround 11.2%. As a result of decelerating export growth alongside significant import growth, the trade surplus in July came toUSD84.7bn, falling below the June level of USD99.0bn; the trade surplus in July expanded by c. USD5.3bn yoy, lower than that inJune of USD29.5bn. The export value was revised down by 0.4% for July 2023, with the magnitude of revision narrowedmonth-by-month in 2024 ytd. 1)The global manufacturing cycle has weakened marginally. In July, the manufacturing PMI across developed countriesgenerally fell below the 50 boom-bust line. The global manufacturing PMl fell into contraction territory for the first time thisyear, indicating another cyclical downtum in the mainufacturing sector. 2)The marginal slowdown in the US consumption may have drag China's export of light industrial products, textilesand other consumer goods, in our view. In June, actual consumer spending in the US increased by 0.2% mom, lower thancompanies like Starbucks, L'Oréal, and Procter & Gamble reporting lower-than-consensus profit growth rates.Bloomberg consensus estimate:of 0.3%. Meanwhile, in 2Q24. profit growth of US consumer-related segments cooled, with There have beein setbacks in the rebound of the export price index. In 1H24, the export price index in RMB termisrebounded overall, but since mid-July, global commodity prices have generally undergone substantial adjustments. Forexample, Brent crude oil prices fellby 5.7% in July. However, there remains structural support for China's exports: high-end manufacturing industry has sustainedbuoyant, with relevant products such as household appliances and general machinery sustaining robust export growth.China's exports to cerlain developing countries have been structurally strong, while those to developed countries haverebounded on a low base. Specifically: By product, in July 2024, yoy growth in China's exports of mechanical & electrical products stayed strong, contributing5.8pp to overall yoy export growth for July; specifically, the export boom in the auto and electronics chain sustained.falling for July; steel exports continued to decline in July, Specifically: Yoy growth in exports of light industry & textiles edged down by 4.1pp vs June to -2.4% in July, and we attribute suchweakening in demaind for consumer goods exports to a consumption slowdown in the US. 2)Exports of mechanical & electrical products rebounded to double digits, with a continued boom of electronics chainand export chain. In July, yoy export growth of mechanical & electronical products picked up from 7.5% in June to 10%including yoy export growth of integrated circuit/computer at 27.7/19.3% yoy: yoy growth in household appliance/generalmachinery exports fell 0.7/2.6pp vs June to 17.2/14.7% in July, indicating a continued boom in sectors seeking overseasexpansion, in our view. 3)Yoy export growth of automobiles and auto parts stayed high. For July, yoy export growth of automobiles and auto partsstayed strong at 10.1%; specifically, yoy growth in automobile exports rose 1.2pp vs June to 13.8%; that in the volume ofexporled automobiles strengthened from 19.5% in June lo 25.6%, with a yoy decline of 9.4% in prices of exportedautomobiles, which narrowed from June. 4)growth in steel exports weakened from 0.8% in June to -2.4%, with yoy growth of steel export volume coming in at 7.1% andyoy growth of average steel export price at -8.9%, underscoring a persistent patterm of'price reduction in exchange for export By countryiregion, in July, yoy growth in China's exports to developed countries echoed the rally since April, and that toexports to developing nations. Specilically. 1)For developed economies, yoy growth of China's exports to the US and EU both continued to rise, In July, yoygrowth of China's exports to the. US/EU strengthened 1.5/3.9pp vs Junie to 8.1/8.0%,2)In July, yoy growth of exports to the ASEAN, China's Taiwan, Japan, and South Korea fell, Specificall, in July, yoygro